The Slackers’ X-cellent Adventure

“Advertising has us chasing cars and clothes, working jobs we hate so we can buy $#!† we don’t need. We’re the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War is a spiritual war; our Great Depression is our lives. We’ve all been raised on television to believe that one day we’d all be millionaires, and movie gods, and rock stars. But we won’t. And we’re slowly learning that fact. And we’re very, very pissed off.” —Tyler Durden (Brad Pitt), Fight Club (1999)

Age: 32 to 43 (born between 1965 and 1976)Biggest financial concern: Caring for parents and kidsBiggest political concern: The end of Social SecurityPreferred communication channel: Web research; in-store purchase; customer support by phone

How do you define a generation that has resisted definition? The pop-culture quotes that best fit Generation X (we sprinkled a few across this article) show an aversion to predictability and routine, which has contributed to the broad dismissal of its members as “slackers.” But yesterday’s slackers are now raising families, buying property—housing crisis notwithstanding—and trying to endure their prime earning years without sacrificing their kids’, their parents’, or their own futures.

Sources even differ on which years bracket Generation X, and that makes it difficult to get precise data. Some demographers use 1964 as the starting point and 1979 as the end; others start as early as 1961 or end as late as 1984. Some firms (such as Forrester Research) place Generation X between ages 28 and 41, while others have a lower limit of 25, and still others 32. For our purposes, Gen X will be those people born between 1965 and 1976 (now between the ages of 32 and 43), which most closely mirrors the definition used by the United States Census Bureau in its March 2003 Current Population Survey.

But the Census Bureau itself isn’t always consistent; a planning document from 2000 described an intended Generation X study as “concentrat[ing] on the attitudes of those people born between 1968 and 1979, a group with a reputation for apathy and cynicism.” They got that part right, whatever the specific age of the people. Or maybe not: “The study will use a brief survey, semi-structured interviews, focus groups, and site observations at places that Gen-Xers congregate (such as ‘powwows,’ civic groups, coffee houses, and other ‘slacker joints’),” the document says. “This group will constitute the core respondents for the 2010 Census, so knowledge of their attitudes toward privacy and government may suggest ways to motivate response from this group.” Good luck with that.

The SetupTo understand how Generation X is spending whatever money it has, it’s crucial to get a sense of the forces that shaped it, and not dismiss it with the S-word—slacker—it’s so often tagged with. This is a highly educated, entrepreneurial, and individualistic generation, and the one that bridged the analog and digital eras.

Age is not at the core of Generation X’s self-perception—something important to realize if we’re to understand how Xers spend their money. More than any generation before them, with the possible exception of latter-day Baby Boomers, Gen Xers never completely grew up. Too many changes of direction in our formative years saw to that.

“The whiplash of the economy is what has shaped Gen X. It affects how we view money and spending,” says Gen Xpert Lisa Chamberlain, author of Slackonomics: Generation X in the Age of Creative Destruction. “There’s the obvious sort of demographic definition…but the cultural definition of Generation X is more relevant. We’re really talking about middle-class, educated kids, who mostly grew up in the suburbs. They were raised in the 1980s, with Reagan as the president and ‘morning in America,’ with the expectation they’d go to [business] school and be rich by 30.”

That mentality, as personified by Michael J. Fox’s character Alex on the mid-1980s sitcom Family Ties, was not destined to survive. “Gen X’s expectations changed greatly in or just after college—it’s the first generation to really rely on student loans and credit, so all these people started their adult lives in debt,” Chamberlain says. “They graduated into the early-1990s recession, when entry-level pay was down, costs were going up, and globalization started to eat into the job market and the economy.”

“We went from yuppie wannabes to apathetic slackers,” Chamberlain says. Then the Internet bubble came along, and Gen X thought, ‘Maybe we’ll be millionaires after all,’ but then that bubble burst.”

But really, where did that slacker label come from? According to Kenneth Gronbach, author of The Age Curve: How to Profit from the Coming Demographic Storm, Xers “were labeled ‘slackers’ and ‘lazy couch potatoes’ because so few Xers responded to help-wanted ads when they entered the entry-level labor force, and the Xers who did respond were said to have a poor attitude and work ethic.” The reason for this isn’t laziness, though; Gronbach’s numbers show that Generation X is 11 percent smaller than the previous generation—he uses a larger age range for his definition—and this led to skewed perceptions as Boomers moved up or out of positions. “For every 10 jobs the Boomers left behind, there were only nine Xers to replace them,” he writes. “Job number 10, often a less-desirable position like fast-food worker, went begging. In any given workforce there are always 3 or 4 percent who are unemployable. It was this unemployable faction that gave Generation X its undeserved reputation.” (See Required Reading, page 20, for an extended interview with Gronbach.)

Despite being perceived as slackers, Gen X attended college at twice the rate that Baby Boomers did—500 enrollments per thousand of population compared to 250 per thousand for Boomers, according to Gronbach. That ain’t slack.

“What is it that you want from me, huh? You want me to get a job on the line for the next 20 years ’til I’m granted leave with my gold-plated watch....? Well, you can just exhale because it’s not gonna happen, not in this lifetime.” —Troy Dyer (Ethan Hawke), Reality Bites (1994)

When You Spend, Spend WiselyBut for all its education and entrepreneurial spirit, Gen X finds itself needing to be a little cautious about where it puts its money. According to an Economic Mobility Project report, the median income for men in their 30s is 12 percent lower (when adjusted for inflation) than it was 30 years ago.

There are significantly fewer Gen Xers in the U.S. than there are members of the generations either preceding (Baby Boomers) or following (Gen Yers). This has reduced Gen X to an oxymoron: a massive niche market. As a result, it’s a perpetual “other” as far as marketing and advertising are concerned. This phenomenon, combined with corporate America’s failure to successfully engage Gen X in large numbers, has left Xers at odds with marketing outreaches. “Gen X is a smaller demographic than Boomers, and it has less money, but we hate being marketed to,” Chamberlain says. “Businesses tried to market to us the same way as they did the Boomers—as part of a generation. We’re too individualistic.”

That size differential is significant for another reason: economic sustainability. Xers are the core of the U.S. tax base; at the same time, they’re caring for their aging parents as well as putting their own kids through school. Gen X is caught between a rock and a hard place. Money and time are dedicated to those issues before others in many cases.

“Many Gen Xers say paying down debt is a higher priority than saving,” writes Jonathan Craig, vice president of investor services at Charles Schwab, in an October 2007 article on gather.com. “Reducing debt is important but starting to save for your goals now will make achieving them easier. After you’ve made your minimum debt payments, consider splitting additional money evenly between saving and debt reduction.”

That doesn’t mean Xers won’t spend, though. “The mass of Gen X emphasizes quality over quantity,” Chamberlain says. “We went in the Dwell magazine direction: quality, comfort, and design. Gen X families are willing to live in a smaller space if it means comfort or convenience. This generation hates spending time and money on commuting. It helped fuel the revitalization of cities; it’s not willing to ‘drive until you qualify’ [for a mortgage].”

Perhaps, but Xers are also buying and improving houses—in fact, they’re the main group doing home improvements, according to the Joint Center for Housing Studies of Harvard University. Its research indicates the top ages for remodeling are when homeowners are between 35 and 45—and that’s where Gen X is. Boomers hold the lead in total spending because they’ve been doing it for longer, but Xers spend more per household.

“These general spending patterns make sense, as they correspond to different needs in a household’s life span,” writes Amal Bendimerad, author of “Understanding Generational Differences in Home Remodeling Behavior,” the October 2005 Harvard study. “By middle age, households have been formed, income is more stable or growing, and discretionary income is higher. Overall, these are typically years in which families have been formed and the home is a greater priority. Safety, aesthetics, increased space, and energy efficiency—all major reasons for home-improvement projects—are high priorities for families at this point in the life cycle.”

The Rest of the Shopping ListGreen products are one place where Xers will be spending more money than the younger generations will, though not as much as Boomers will, according to stats gathered by Alliance Data regarding domestic product purchases. For example, 49 percent of Gen X respondents would probably or definitely buy environmentally friendly paper products, compared to 38 percent of Gen Y and 56 percent of Boomers. Laundry products showed an even wider disparity: 53 percent of Xers would buy green detergents, versus just 37 percent of Gen Y and 62 percent of Boomers.

Interestingly, this trend reversed when it came to baby products. While 21 percent of Xers and 18 percent of Boomers said they’d probably or definitely buy environmentally friendly baby products, Yers said so 34 percent of the time. On the one hand, Boomers have largely aged out of the part of life where they’re buying baby diapers and formula, and Xers’ biological clocks are winding down as well. On the other hand, Gen X is experienced in family-building by now, while Gen Y is just starting out—ideals might give way to convenience once its members have had a taste of parenthood.

So, does this mean Generation X will be content with thriftily improving their homes the green way, while saving for their kids’ college and their own retirement, and helping their parents cope with the twilight years?

Not likely. Remember, X is the individualist generation, one teased by dreams of yuppie affluence and raised during a time of accelerating technological innovation. Therein lies the key: Serve Xers something innovative, and they will buy.

“The only way you can grow a business with Generation X as a primary customer is to have a brand-new product or service,” Gronbach writes. Among the products embraced first by Gen X over the years are the personal computer, the cell phone, the BlackBerry, portable GPS, snowboards, and now the iPod. “If your product or service has an established infrastructure that was meant to meet the demands of Boomers, who have since aged out of your market and been replaced by Generation X, you have a problem. However, if you have a new product or service that is targeted at the current Generation X age demo, the fact that they are a small generation following a big one doesn’t mean a thing.”

SIDEBAR: Creative Destruction? Slacktastic!The concept of creative destruction, as popularized by Austrian economist Joseph Schumpeter in 1942, serves as the backdrop (not to mention the subtitle) for Lisa Chamberlain’s Slackonomics. She describes it as “how capitalism renews itself through seemingly sudden economic convulsions. Stagnant industries are destroyed and people get hurt in the churn (think [the] demise of General Motors), while creative ideas and new industries—driven by entrepreneurs—are able to flourish (think Google).” As the generation that bridged the analog and digital worlds, experienced back-to-back economic bubbles and their eventual bursting, and has contended with income inequality, outsourcing, and so much more, Gen X both uses creative destruction and rides its tides. Burned by overeducation and underpayment, Gen X is a heavily entrepreneurial generation.

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